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FERC Probes High Rates of Four Interstate Gas Pipeline Companies

February 3, 2016 By Cheryl Kaften

The Federal Energy Regulatory Commission (FERC) on January 21 announced that it will initiate Natural Gas Act, Section 5, investigations (Docket Nos. RP16-299-000, RP16-300-000, RP16-301-000 and RP16-302-000) of the rates charged by four interstate natural gas pipelines. The inquiries will determine whether the companies are substantially over-recovering their costs, resulting in “unjust and unreasonable rates.”

 

Section 5 of the Natural Gas Act authorizes the commission to fix just and reasonable rates on its own initiative or after complaint by a third party. Among the companies under scrutiny are Tuscarora Gas Transmission, which operates operating a natural gas pipeline in Nevada and northwestern California ; Empire Pipeline, which operates mainly in upstate New York; Iroquois Gas Transmission System, operating throughout the Empire State; and Columbian Gulf Transmission, which operates in Kentucky, Maryland, New York, Ohio, Pennsylvania, and Virginia (in order of the dockets listed above).

FERC reviewed the cost and revenue information provided by these companies in their filings of FERC Form No. 2, the Annual Report for Major Natural Gas Companies, and FERC Form No. 2-A, the Annual Report for Non-Major Natural Gas Companies, for 2013 and 2014.

Based on this review, the commission became concerned that each pipeline company is collecting revenue substantially in excess of the pipeline’s actual cost of service, including a reasonable return on equity. 

FERC directed each pipeline to file a cost and revenue study within 75 days of the issuance date of that pipeline’s order. The Commission also set each case for evidentiary hearings before a FERC administrative law judge. 

 

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